Written by: Ashley Baader
Have you ever stopped to think about what secrets may be hidden in your phone? It turns out your phone knows a lot more about you than you think and this information may be shared with other people without you even knowing about it. My name is Ashley Baader and you’re listening to Big Brother Surveillance: Fiction or Reality.
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These days, everyone walks around with a cell phone. In the United States, 56% of adults own a Smartphone and 91% own a cell phone (Phua, Page and Bogomolova). My 73 year old grandfather of all people has a cell phone attached to his hip. He even sends texts with emojis when I hardly ever use emojis.
Your phone does more than let you text your friends or play Candy Crush while you wait in line for your morning coffee. It is able to track your location and retailers are starting to use this as a way to learn more about their customers.
In the past, retailers used a number of different methods to conduct research. This included surveys, research observation, shadowing and video surveillance (Phua, Page and Bogomolova). Nowadays, Wi-Fi signals emitted by a cell phone can be tracked and are able to give a clear picture of where someone has been (Dwoskin). All cell phones produced by Apple have a Unique Device Identifier (Michael and Clarke). This identifier allows Apple to track their users (Michael and Clarke). The Unique Device Identifier is also able to let marketers track people’s device (Michael and Clarke). In 2012, Apple added an Identifier for Advertisers in order to stop marketers from tracking peoples Unique Device Identifier (Michael and Clarke). Yet this solution is temporary and by default is open for tracking and can be difficult to turn off (Michael and Clarke).
Recently a number of companies have emerged who are able to provide retailers a way to track their customers. Nordstrom made quite a commotion when it was learnt that they employed the services of Euclid Analytics to calculate the foot traffic in their stores. Euclid provided the retailer with sensors that could track their customers Smartphone’s when they tried to connect to the stores Wi-Fi (Cohan). The data obtained would then be sent to the cloud where it would create an online dashboard for store managers (Cohan).
This allows retailers to break down revenue into three parts:
1. The number of people who walk in the store
2. The percentage of those people who buy something, also known as the conversion rate
And 3. The average size of those customers’ purchases also called the basket size (Cohan).
Founder and CEO of Euclid Analytics, Will Smith, says that Euclid can help stores increase their revenues in two ways.
First, they are able to track how many people pass a store window (Cohan). This helps retailers determine how to change their window displays in order to attract more people into the store (Cohan). If the percentage of people who buy something stays the same and more people come into the store, retailers will make a bigger profit (Cohan).
Secondly, Euclid can determine how long people stay inside the store (Cohan). This information on in-store traffic allows managers to predict when the store will be busiest (Cohan). With this information, managers will be able to put more sales people on the floor when the store is busy and assign less people when they now the store will be quiet (Cohan). What this all means is that when the store is very busy they will be able to close more sales with the added personnel and when there are few potential buyers the retailer can cut its costs (Cohan).
To learn more about Euclid Analytics and Nordstrom refer to the video by following this link:
Euclid Analytics is a company that allows retailers to track customers within their own stores. Yet there are companies that go beyond tracking customer cell phones within an individual store. Turnstyle Solutions is a Toronto based company that works similarly to Euclid Analytics. Smartphones that are Wi-Fi enabled are constantly trying to join a network, even if you’re not using your phone (Tossell). When your phone tries to join a network it provides a unique identifier known as a Media Access Control or MAC address (Tossell). What Turnstyle’s system does is it looks for Smartphone’s that are broadcasting their MAC address (Tossell). In order to maintain privacy, the system forgets the code itself and hashes it into an identifier that cannot be traced to a specific person (Tossell). The system will be able to remember if a Smartphone returns to the same location (Tossell). This allows retailers to see how many of their customers are repeat customers and what the average time between visits is (Clifford).
Turnsyle is different than Euclid Analytics because it is one of the few companies that uses cell phone tracking in a broader context, tracking people where they live, work and shop (Dwoskin). What Turnstyle does is it uses foot traffic data and people's location to create lifestyle categories like morning jogger and sports fan (Dwoskin). These lifestyle categories allow retailers to create promotions that will really resonate with their clients (Dwoskin).
For example, if a retailer knows that many of their customers go to the gym, they could start selling athletics t-shirts with their logo. Turnstyle doesn’t include people’s names in their report, but if someone logs into free Wi-Fi provided by one of their clients they can collect that person’s name, age, gender and social media profile if they log into Facebook (Dwoskin). This shows that when something is advertised as free, it’s never really free. Retailers can provide free Wi-Fi but in return they could be gathering more detailed information about you.
To learn more about Turnstyle Solutions and cell phone tracking refer to the video by following this link:
Most people would be surprised to learn that these types of companies exist. So I’m sure lots of people are wondering what the point of all this is. How can retailers benefit from tracking peoples cell phones? Brick and mortar stores argue that this practice allows them to stay competitive with online retailers.
Many people use digital retailers to do their shopping instead of going in the store. Online retailers, like Amazon, are able to collect people’s digital crumbs (Clifford).This is why you get pop up ads for products you just looked at online (Datoo). E-commerce sites are able to advertise custom offerings directly to consumers, but brick and mortar stores are at a disadvantage (Dingman).
Retailers argue that what they’re doing isn’t any different than what e-commerce retailers do online (Clifford). Cell phone tracking allows brick and mortar stores to even the playing field with online retailers (Tossell). E-commerce is based on analytics and retailers are excited to build shopper profiles and get the same analytic information as online retailers (Dingman). Location information will provide retailers with trends that they can compare over time (Datoo). This could determine how effective a marketing campaign was or if the store's layout should be changed (Datoo). Not to mention retailers will be able to hold promotions that specifically target's their customers demographic.
To learn more about how brick and mortar stores are collecting data on customer behavior refer to the video by following this link:
Cell phone tracking is a current trend in the retail industry (Phua, Page and Bogomolova). This is because it doesn’t cost lots of money, is able to collect lots of data and it does not require the cooperation of shoppers (Phua, Page and Bogomolova).
A study in the Journal of Retailing and Consumer Services, determined that Bluetooth tracking is able to capture and reflect shopper behavior (Phua, Page and Bogomolova). Yet their study shows that people over 66 years old are underrepresented (Phua, Page and Bogomolova). This means that complementary methods, like tagging shopping carts or video surveillance, need to be used when researching older shoppers (Phua, Page and Bogomolova).
A lot of people don’t know that some retailers are tracking their cell phones. I wanted to get a general idea of the average consumer’s opinion about privacy and research practices. In order to learn people’s position I surveyed friends and family.
What I learnt is that the majority of the people surveyed either always or often have their cell phones with them. Those people were also uncomfortable giving up their location which they considered private information. When asked about the idea of a retailer tracking their location within their own stores peoples responses were varied. Yet when asked, people were mostly uncomfortable with a company tracking their location outside of their store. At the end of the day, most people weren’t knowledgeable about the research practices used by brick and mortar stores and were uncomfortable with retailers tracking their cell phone.
To learn more about my survey refer to Blog Post 1:
This survey brings up the question of privacy. Stores that use cell phone tracking to research their customers know that this is a delicate subject. This is because knowing someone’s previous location and having the ability to predict where they might go next is a very influential tool for social control (Michael and Clarke). Some retailers would rather stop using cell phone tracking all together if they had to disclose to their customers that they were tracking them in the first place (Dwoskin). These retailers do not think cell phone tracking is invasive and are scared people will panic for no reason (Dwoskin).
When Nordstrom started their experiment to track customers they received complaints from the public (Clifford). Cookies that let online retailers know how people shop is one thing, but some see the practice of retailers tracking cell phones as over the line (Clifford). The deputy director general of Big Brother Watch, Emma Carr, believes that this practice ignores customer’s privacy and shows that people are more interested in making profit than of protecting people’s privacy (Datoo).
According to an article from Telfer’s School of Management from the University of Ottawa, marketers must balance consumers’ choice of engagement and retailer's desires. Their findings suggest that when it comes to mobile marketing consumers are concerned about privacy, want their permission respected and want the ability to control when and how they engage with mobile marketing (Azhar and Persaud). Essentially, consumers want to participate on their own terms (Azhar and Persaud).
Retailers are aware of the public’s privacy concerns. This is why Euclid Analytics stresses that they don’t use personally identifiable information and that they use aggregated data (Datoo). Euclid says they want to protect individual privacy (Datoo).
Devon Wright, who launched Turnstyle as CEO, is aware of people’s fears, but he says that identifying data is encrypted when it is collected (Dingman). He says that Turnstyles goal is not to make people feel tracked or spied on (Dingman). In order to address privacy concerns, Turnstyle offers individuals an opt-out feature on their website (Dingman). People can enter their phone’s MAC address and Turnstyle will then stop tracking them (Dingman). In order to prevent cell phone tracking people can also turn off their Wi-Fi (Dingman).
To learn more about how retailers are addressing privacy concerns refer to Blog Post 2:
If you are wondering what stores track their customers there is, as of now, no way for you to find out (Dingman). Turnstyle is working on voluntary signs that businesses could put up to inform customers (Dingman). Yet, they don’t anticipate the need to force clients to post warning signs (Dingman).
As it turns out, Big Brother type surveillance has become more reality than fiction. This is because brick and mortar stores are now using cell phone tracking as a way to research about their customers. Next time you step out of your house with your cell phone you might stop and think twice about it. This little device that you carry around has the ability to do things that seem like pure fiction. In reality, Big Brother is always there, always watching.
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